Motown Record Corp. v. Brockert

• Decision Date: 17 September 1984
• Citation: 207 Cal.Rptr. 574,160 Cal.App.3d 123
• Court: California Court of Appeals Court of Appeals
• Parties: MOTOWN RECORD CORPORATION et al., Plaintiffs and Respondents. v. Tina Marie BROCKERT et al., Defendants and Appellants. Civ. 69060.

Page 574

207 Cal.Rptr. 574

160 Cal.App.3d 123

MOTOWN RECORD CORPORATION et al., Plaintiffs and Respondents. v. Tina Marie BROCKERT et al., Defendants and Appellants.

Civ. 69060.

Court of Appeal, Second District, Division 7, California.

Sept. 17, 1984.

Engel & Engel and Donald S. Engel, James P. Cinque and Mark D. Passin, Los Angeles, for defendants and appellants.

Finley, Kumble, Wagner, Heine, Underberg, Manley & Casey and Alan G. Dowling, Timothy J. Harris and Lilianne G. Chaumont, Los Angeles, for plaintiffs and respondents.

JOHNSON, Acting Presiding Justice.

This appeal arises from a contract dispute between Motown Record Corporation (Motown) and Jobete Music Company, Inc. (Jobete) and singer, songwriter Tina Marie Brockert, known professionally as Teena Marie. (See also Motown Record Corp. v. Superior Court (1984) 155 Cal.App.3d 482, 202 Cal.Rptr. 227.)

Teena Marie appeals from a preliminary injunction restraining her from performing her singing and songwriting talents for We have concluded this option clause does not satisfy the statutory requirement of minimum compensation.

                anyone other than Motown and Jobete until their contracts expire.  At the heart of this appeal is an issue which has received considerable attention in law reviews but has never been addressed by the appellate courts.  The issue is whether a clause in a personal services contract giving the employer the option to pay the employee a minimum of $6,000 a year satisfies the statutory minimum compensation requirement for an injunction restraining breach of the contract. 1  (See, e.g., Note, Statutory Minimum Compensation and the Granting of Injunctive Relief to Enforce Personal Services Contracts in the Entertainment Industries:  The Need for Legislative Reform (1979) 52 So.Cal.L.Rev. 489, (hereafter "Statutory Minimum Compensation");  Tannenbaum, Enforcement of Personal Service Contracts in the Entertainment Industry (1954) 42 Cal.L.Rev. 18 (hereafter "Tannenbaum");  Light, The California Injunction Statute and the Music Industry:  What Price Injunctive Relief?  (1982) 7 Col.J. of Art and the Law 141, (hereafter "Light");  Schlesinger, Six Thousand Dollars Per Year (Dec.1968) J. Bev.  Hills Bar J. 25 (hereafter "Schlesinger").)
                

FACTS AND PROCEEDINGS BELOW

In 1976, Teena Marie entered into contracts as a recording artist and songwriter with Motown and Jobete respectively. At the time she signed these contracts she was an unknown in the music business. Her experience consisted of singing with local bands at weddings, parties, and shopping centers and roles in school musicals. She had written some songs but none had been recorded or released commercially.

The Motown and Jobete contracts were admitted into evidence at the hearing on the preliminary injunction. Each contract was for an initial period of one year and granted the companies six options to renew the agreements for one-year periods on the same terms applicable to the initial period. Teena Marie and the companies were in the sixth and last option period when their dispute arose. Each contract contained an exclusivity clause providing that during the term of the contract, including any renewals, Teena Marie may not perform like services for another employer. The contracts further provided each company with the option, exercisable at any time, to pay Teena Marie "compensation at the rate of not less than $6,000 per annum."

Between 1979 and 1980 Teena Marie recorded four albums for Motown. All were successful. Indeed her fourth and last album, "It Must Be Magic," achieved gold record status, selling more than 400,000 copies. During this time she also wrote songs for Jobete.

In May 1982, Teena Marie informed Motown and Jobete she would no longer perform under the contracts and gave a written notice of recision. In August 1982, Motown and Jobete sued Teena Marie for breach of contract and injunctive and declaratory relief, among other things. The following month, more than six years after she began performing under the contracts, Motown and Jobete exercised their options to pay Teena Marie at the rate of $6,000 per year. In November 1982, Teena Marie informed Motown and Jobete she had signed a recording contract with another company and intended to commence performing Upon learning of her intention to perform for another company, Motown and Jobete sought a preliminary injunction under the exclusivity clauses of their contracts to prevent Teena Marie from performing services for another employer until her contracts with them expired in 1983.

for that company later in the month.

The trial court granted a preliminary injunction in essence restraining Teena Marie from performing as a singer or songwriter for anyone other than Motown and Jobete until April 9, 1983, the purported expiration date of her contracts. This appeal followed.

DISCUSSION

Before turning to the major issue in this case, we address the preliminary questions whether this appeal is moot and whether, to be enforceable by injunction, the contract must guarantee the performer a minimum of $6,000 per year. We then explain why we believe the option clause does not satisfy the minimum compensation requirement of Civil Code section 3423. ²

I. THE APPEAL IS NOT MOOT.

All the operative clauses of the injunction are modified by the words "until and including April 9, 1983." This suggests Teena Marie may do any of the enjoined acts after April 9, subject to Motown's and Jobete's remedies at law. However, the companies have not conceded this point although they have had the opportunity to do so in the trial court and in this court. While urging this appeal is moot, the companies' brief carefully skirts the issue of whether Teena Marie is still prohibited under the preliminary injunction from recording or otherwise using songs produced or conceived on or before April 9, 1983.

A further controversy remains with respect to the order granting the preliminary injunction. Pursuant to the injunction and Code of Civil Procedure section 529, the companies were required to file an undertaking in the sum of $50,000 "for the purpose of indemnifying [Teena Marie] for such damage as [she] may sustain by reason of" the preliminary injunction. If it should be determined on this appeal that the companies were not entitled to the injunction, Teena Marie may be entitled to recover upon this undertaking. (Rees v. Gardner (1960) 185 Cal.App.2d 630, 633, 8 Cal.Rptr. 505.)

An additional reason for proceeding to the merits of this appeal lies in the fact it involves an issue of continuing public interest which is likely to recur yet evade appellate scrutiny. (See Liberty Mut. Ins. Co. v. Fales (1973) 8 Cal.3d 712, 715, 106 Cal.Rptr. 21, 505 P.2d 213, and cf. Lemat Corp. v. Barry (1969) 275 Cal.App.2d 671, 673, fn. 2, 80 Cal.Rptr. 240.)

As we noted above, the major question in this appeal, whether the $6,000 option clause satisfies the statutory requirement of minimum compensation, has never been addressed by an appellate court in the 65-year history of Civil Code section 3423 (Fifth). Nevertheless it is a question the resolution of which will affect a large segment of California business; not only the entertainment and sports industries but virtually any enterprise where the employee's service is of "a special, unique, unusual, extraordinary or intellectual character." (Ibid.) The resolution of this question will have ramifications on the cost of services and competition in those businesses which will ultimately impact California consumers. Furthermore, as one commentator has noted, use of the $6,000 option clause has worked in favor of the employer in negotiating contract disputes with employees. (Statutory Minimum Compensation, supra, at pp. 491-492.) If this advantage is not justified under the statute, we should act to clarify the meaning of the statute.

Because personal services contracts are typically of short duration, especially in the entertainment field, (Statutory Minimum Compensation, supra, at pp. 499-500, Light, supra, at p. 170, fn. 40) it is likely appellate review of injunctions prohibiting breach of the exclusivity clause may continue to be thwarted by the expiration of the contract term.

Under all the circumstances, we conclude this appeal is not moot.

II. HISTORY OF THE MINIMUM COMPENSATION REQUIREMENT IN THE CALIFORNIA LEGISLATURE AND COURTS.

A brief history of the minimum compensation requirement of section 3423 (Fifth) is an important aid to understanding the issues underlying the option clause.

It has long been a principle of equity that a contract to perform personal services cannot be specifically enforced. (Poultry Producers Etc. v. Barlow (1922) 189 Cal. 278, 288, 208 P. 93; Note, Equity--Negative Covenants in Contracts for Personal Service (1937) 10 So.Cal.L.Rev. 347-348.) In the mid-19th Century an exception to this rule was born in England that where the employee both covenants to perform for the employer and not to perform elsewhere, equity will enjoin a breach of the negative covenant not to perform elsewhere although it cannot specifically enforce the affirmative covenant to perform for the employer. (Lumley v. Wagner (1852) 42 Eng.Rep. 687.) ³ The infant doctrine was not warmly embraced even in the country of its birth. (Whitwood Chem Co. v. Hardman (1891) 2 Ch. 416; 5A Corbin on Contracts (1964) § 1208, p. 415.) And, while it has gradually gained acceptance in the United States, it has been questioned by some eminent legal scholars. (See, e.g., comments of Justice Holmes quoted in Note, Lumley v. Wagner Denied (1894) 8 Harv.L.Rev. 172 and 11 Williston on Contracts (3d ed.1968) § 1447, pp. 1018-1019.)

When the California Civil Code was adopted in 1872 it did not include a Lumley exception to the rule prohibiting specific performance of personal services contracts. Section 3423, as originally enacted, provided, "An injunction cannot be granted: ... 5. To prevent the breach of a...